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Did auto dealers pocket more of the deal in March?

In a mystery of missing money, it looks as if auto dealers held onto more of the funds that poured through the retail industry in March.

The evidence?

Incentive spending was up across the U.S. auto industry in March, and yet average new-vehicle transaction prices also were up.

The implication: Manufacturers offered more money to reel in consumers in March, but all of those incentives were not reaching buyers, says Larry Dominique, president of ALG Inc., Goleta, Calif., the market-tracking firm that sets vehicle residual values.

“Sales will be up only about 2 percent for March,” Dominique predicted before the industry’s release of final sales data on Tuesday. “And incentives were up by 8 percent, year over year.”

ALG reports that incentives rose to an average of $2,773 per vehicle across the industry in March, an increase of $71 per vehicle from February.

Dominique observes that, as of the end of March, the industry still is not selling at an annualized volume of 16 million vehicles. Automakers and analysts widely forecast sales of more than 16 million for 2014, some of them predicting volumes as high as 16.5 million.

“It looks like March will put us in the range of about 15.7 million,” Dominique says. “At this point, it’s going to need to be quite a summer to get us up to 16.5 million sales.”